Hughes Drilling
is bucking the industry-wide trend of deep downgrades to earnings forecasts as it benefits from the drive by coal miners to boost production in an effort to lower unit costs.

The coal-focused drilling company on Friday confirmed its revenue and rig utilisation expectations for the current financial year were broadly in line with prior guidance and had not been downgraded as severely as
Boart Longyear
,
Ausdrill
and
Transfield Services
have done.

Hughes’s shares rose 17 per cent to 28¢ as of 3pm on Friday, recovering losses of the last week when investors sold off shares due to fears of a severe downgrade.

Hughes’s previous guidance was for earnings growth, including a rise in its drill and blast rig count from 27 June 2012 to 37-40 by June 2013. The company said growth had continued in the second half, albeit at a slower pace than in the first half and rate profiles for new and existing contracts were stable.

“For us, utilisation remains incredibly strong," chairman Robert Hackett told The Australian Financial Review. “We are still in a growth pattern. As long as coal exports keep growing then demand for our services is going to keep growing."

Coal exports are expected to rise by 13 per cent in the current financial year. Hughes controls around 47 per cent of the drill and blast market in Australian coal, compared with around 12 per cent held by Ausdrill. It does not conduct exploration drilling and therefore is only exposed to production.

“We have been awarded a number of contracts over the last six months," Mr Hackett said. “We are still in the process of delivering rigs to those contracts. Most of the expansion is coming from increasing their drill metre requirements."

Many coalminers are moving to owner-operator models in an effort to cut costs. Mr Hackett said that kind of move applied more to mining operations than drill and blast work.